ROYAL BANK of Scotland (RBS) has announced the resignation of seven non-executive directors from its board, including former EU commissioner and attorney general Peter Sutherland.

A reduction in the size of the board had been expected since the British government took a 70 per cent stake in the lender, which owns Ulster Bank and First Active in the Republic.

Mr Sutherland is also chairman of energy giant BP, a role from which he is due to retire in June, and chairman of Goldman Sachs International.

He has served on the RBS board for eight years and was not due for re-election for another three-year term due to the nine-year limit.

Although announced yesterday, the decision by the directors to retire was taken at the bank’s board meeting last Tuesday.

Sources close to the board said the decision to retire had been taken without “a gun being put to our heads, although I’m sure it probably could have been”.

The boardroom shake-up comes just three days after Philip Hampton replaced Tom McKillop as RBS chairman.

The board has faced criticism for allowing former chief executive Fred Goodwin to make too many acquisitions and pursue a risky strategy.

Britain’s government has had to inject £20 billion (€22.9 billion) into the bank which is set to report a 2008 loss of up to £28 billion, a record for a UK company.

The retirements clear the way for the appointment of three new non-executives as part of conditions attached to a government bailout.

Aside from Mr Sutherland, the other non-executive directors who resigned are: Bob Scott, senior non-executive of RBS and chairman of publisher Yell, Jim Currie, Bill Friedrich, Bud Koch, Janis Kong and former treasury official Steve Robson.

The board keeps its three executives, including new chief executive Stephen Hester, finance director Guy Whittaker and Gordon Pell, head of regional markets.

There are five remaining non-executive directors in addition to Mr Hampton, who said now was the right time to cut the board’s size as several directors were completing two or more terms or had asked to retire.

Mr Whittaker and Mr Pell are the only executives left from Mr Goodwin’s team.

One challenge awaiting the new board is a decision over bonus payments.

The company has faced criticism following reports it is considering awarding large bonuses, despite expectations that the lender faces massive losses. – (Additional reporting Reuters)